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Retail Law Advisor

Is Artificial Intelligence the Key to Retail Survival?

Posted in Retail, Retail Sales, Technology

In light of the sea change in the current retail landscape, which was punctuated by the recent acquisition of Whole Foods by Amazon, retailers today are forced to ask themselves: How will we combat disruption in our industry by giants like Amazon and its few peers? To what extent should we migrate to mobile shopping (“m-commerce”), adopt cashier-less checkout, or even try to deliver purchases by drone?

Artificial intelligence is the prohibitive favorite among analysts to influence the future of retail, but current examples of retail adaptations to changing consumer preferences show that not all success will be driven by technology. According to a Gartner report and a TechEmergence article, some of the many adjustments that retailers are making to stay relevant in the world of online giants are high-tech, but some are not: (1) free delivery and returns; (2) data collection by in-store audio and video monitors; (3) improving in-store footprint/layout; (4) providing in-store assistance from people and robots to improve the experience and make checkout quicker/easier; and (5) using browser history and/or in-person shopping history to personalize the shopping experience and provide personalized promotions.

The consistent theme of these changes appears to be tailoring the shopping experience to each customer and expediting the painful parts of the process, namely, standing in lines and paying. Retailers that originated as exclusively e-commerce operations inherently better understand and implement artificial intelligence solutions. On the other hand, large retail establishments and boutique brick and mortar shops have had varying degrees of success in maintaining a devoted consumer base despite the stores’ best efforts to stay relevant.

Big box stores and club/membership stores are stereotypically slower to make changes because of their conservative boards and corporate hierarchies. The short-term bottom line matters most. Stock-price pressure will often force the hand of these stores to make only those changes that directly and irrefutably improve the bottom line. While artificial intelligence has gained traction in certain industries and certain companies, technology-based automation is often used in these stores only for certain pieces of the supply chain or manufacturing improvements, where the effect on the bottom line is perceived to be more easily calculated. With respect to UK grocery stores, for example, a recent Blue Yonder study found that “nearly 85 percent of UK directors said automation would help them to make faster decisions, yet in spite of this, half of grocery retail managers said that ‘gut feeling’ still plays a major part in their decision-making process.”

Boutique retailers often take a more personalized, but sometimes less high-tech, approach to improve customer conversion, retention and other KPIs. Their efforts may include: (1) targeted promotions based on proximity/mobile touchpoints; (2) back stories to products explained through multimedia productions; and/or (3) humanizing the shopping experience and making it more interactive (e.g., the DIY or “pick-your-own” movement; the sustainably-sourced local produce). Some small retailers also have a reliable niche customer base (such as tourists) who may be an exception to the general trend of online/mobile purchases. Even these niche retailers have an opportunity to expand their market through targeted advertising and facilitating purchases when customers leave the traditional reach of the niche shop.

Grocery stores, in particular, offer a unique opportunity for a brick and mortar stronghold due to the customer’s innate desire to see and select the fresh food he or she will consume.  The PwC strategy+business blog explains that groceries began as a “pull” over-the-counter industry where the grocer would pull products from a stock room based on a customer’s order at the counter.  The shift to a “push” industry began with the advent of supermarkets, now captained by worldwide retail grocery leader Wal-Mart. Push the products out on the shelves, the theory goes, and let the consumers select from the available choices. Then, more recently, the “digital pull” concept arose, through which mobile grocery orders can be submitted, the grocer will pull the desired products and either arrange for pick up or delivery.  We will see how Amazon applies the digital pull method to Whole Foods, and if the AmazonFresh (grocery delivery) and/or Amazon Go (cashier-less brick and mortar) models becomes their standard.

Nevertheless, in the face of such competition from the push giant, Wal-Mart, and the pull giant, Amazon, smaller grocery stores still have unique advantages of strong customer loyalty and responsive price changes and promotions to be able to “ply-your-wares,” as PwC suggests. The digital ply method may very well prove to keep boutique grocers alive:

A digital ply model gives consumers something they can’t get from a scale-based model: tailored offers based on historical in-store shopping patterns and micro-segmentation derived from big data. The family being targeted by a digital message is not just segmented, but analyzed for its needs and wants, almost down to an individual level. The supermarket no longer tries to compete with Amazon or Walmart by providing everything; instead, it provides what it perceives its customers will want and need most. Sometimes this will be fresh or precooked food; other times, just the right assortment of staple goods. Sometimes, the supermarket offers rare items that a few key customers have bought in the past, and that happen to be available now.

In practice, retailers may also find that a combination of the methods described above works best. Roche Bros., for example, is a Massachusetts supermarket chain that remains confident that it can weather competition from the likes of Whole Foods. It has grown its loyal customer base by implementing a combination of high-tech and traditional strategies. Roche Bros. has run its own e-commerce platform for over a decade, which has been updated and modernized by a top e-commerce software firm, and most locations offer certain delivery and pick-up services. Also, by emphasizing fresh produce, meats, seafood and prepared foods, Roche Bros. has tried to avoid relying on non-perishables that are increasingly purchased through online retailers. It is also expanding new concepts with smaller stores that even better address the needs of local repeat customers. This mixture of technological advancements and strategic product offerings has kept Roche Bros. on strong ground.

As is true in any retail environment, a wholly-successful relationship between a seller and its buyers occurs when the seller has exactly what each buyer wants to buy, and no excess inventory. Like small grocery stores, most traditional small retailers will need to adopt tech-driven solutions to achieve such a delicate balance. But they are best positioned to adapt to local demands and may be able to use a combination of low-tech and artificial intelligence strategies to sustain a loyal customer base, even in the face of giants.

Happy 4th of July!

Posted in Holiday, Retail

dreamstimefree_17461During this week, we pause to proudly celebrate freedom across the United States.

Our blogging team will resume providing timely information about issues that may be facing the retail industry next week.

Thank you for subscribing to our retail blog.  Have a safe and happy Fourth of July!

Warm Wishes,

The Retail Law Advisor editorial board

Retailers Grow Successfully by Introducing New Brands

Posted in Retail, Retail Sales

teenshoppingAs fashion retailers across the country jostle for market share in an ever-changing and ever-competitive marketplace, some retailers are trying to improve their bottom lines not by adjusting or expanding their offerings in each store but by opening differently branded stores separate from their flagship brands. Many retailers, especially those in the fashion world, have found that growth under their flagship brands is pushing up against a ceiling. As margins begin to narrow and discounts are less effective in bringing customers through the door, some companies have sought new customers by expanding into new markets with different brands.

One of the world’s largest fashion retailers, Inditex SA, has been pursuing this approach since 1991 and has ridden its multi-brand strategy to over 7,300 stores.  Two-thirds of the company’s locations now operate under a brand other than the “Zara” flagship brand and account for about one-third of its revenue.  Another example is Hennes & Mauritz AB, a Swedish company that has ridden a wave of popularity among teenagers and millennials with its flagship H&M stores, but has been forced in recent years to diversify the branding of its stores to keep new customers lining up for its goods.  Among other reasons, a drop in net profits from 26% in 2007 to about 9.5% today has motivated executives at H&M to explore introducing new brands as a way to keep growing. While the company started diversifying in 2007 by creating new brands and acquiring smaller retailers, today still less than ten percent of its almost 4,400 stores are under separate brands. Nonetheless, although industry groups estimate that these smaller brands account for only about five percent of H&M’s sales, the company sees its other brands as crucial to its future success by expanding into higher-end clothing that attracts a different consumer than the flagship brand attracts.

It goes without saying that expanding into newly branded locations, or expanding by acquiring smaller boutique brands, are only two of the many strategies a mature retailer can use to entice new customers into its locations and thus diversify and grow its customer base. Companies certainly need to keep revitalizing their flagship brands, whether through implementing more efficient supply chains, improving inventory management practices or adapting marketing plans to appeal to a wider audience. But finding a broader customer base outside the flagship brand’s core demographic by opening or acquiring other branded locations has proven to be a successful growth strategy for some of fashion’s largest retailers.

Amazon & Wal-Mart: Pinky and The Brain of Retail

Posted in Retail, Retail Sales

online-shoppingIn the opening montage of the American animated series, Pinky and The Brain, Pinky asks his best friend, The Brain: “What do you want to do tonight?” To which The Brain replies: “The same thing we do every night; try to take over the world!” Doug McMillon (CEO of Wal-Mart) and Jeff Bezos (CEO of Amazon) personify these lovable characters in their ambition to take over the retail world for better or worse. Last week’s bombshell announcements of online behemoth Amazon’s purchase of Whole Foods and Walmart’s purchase of Bonobos rippled through the retail world, and even caused the stock of certain retailers to plunge, which some business analysts have interpreted to signal the proverbial “white flag” in terms of consumer/investor confidence. As these big-box retailers try to make sense of these momentous deals and the imminent changes to the retail world as they know it, Amazon and Wal-Mart are forging forward in a head to head battle for retail supremacy. If the recent moves from Walmart and Amazon are any indication, the future of retail will be a seamless fusion of online e-commerce and brick-and-mortar retail omnipresence.

For the past decade, Amazon has led an online retail crusade morphing into the country’s biggest online retailer and has crushed the bottom-line of many brick-and-mortar retailers, like Wal-Mart, along the way. But, with Walmart’s purchase of Bonobos and Moosejaw, Wal-Mart has taken a strong foothold in the online retail world to compete on Amazon’s turf. These aggressive moves, aimed squarely at Amazon in an effort to knock it off of its perch, prove that Walmart may well be the only retail giant with enough size, scale and funds to battle Amazon. What both retail giants understand is that shopping is not a monolithic online experience, nor does it operate exclusively in brick-and-mortar shops. And, the whims of modern day consumers call for a versatile shopping experience, whereby consumers can invigorate their senses through an in-store experience one day, and sit in the comforts of their homes perusing online and waiting for their package the next.

Amazon initially explored the grocery business with Amazon Fresh, a grocery delivery service, which did not turn-out as successful as Amazon had hoped due to logistics and economics involved with perishable items. But, given Amazon’s vast institutional knowledge of online e-commerce and its cash cow Amazon Prime, acquiring Whole Foods was a logical and inspired maneuver by Amazon. Not only does this acquisition give Amazon an edge over delivery start-ups such as Instacart and Fresh Direct, but it also provides Amazon with a national platform to compete with Walmart in the grocery arena. Right now, it’s unclear how Amazon will choose to deploy its newest toy. However, with a national footprint on the horizon, one can only speculate that Amazon will likely inject its new darling with an infusion of cash and technological innovation, such as “Amazon Go” which allows consumers to exit the store without checking out.

While Amazon is learning the ropes of retail stores, Walmart’s acquisition of Bonobos will allow it to build expertise in the online universe where it is trying to overtake Amazon. By acquiring Bonobos and various other retail brands, Walmart is corralling established upstart online business that will improve Wal-Mart’s ability to take on Amazon in areas where it lacks expertise and/or inventory. Effectively pairing these online businesses with its existing brick-and-mortar retail stores – whether by incentivizing online shoppers to pick up their items in stores or employing Wal-Mart staff to serve as delivery drivers for online orders – will better position Wal-Mart to break Amazon’s vice grip on the online e-commerce industry.

At one point in time, Amazon and Walmart operated in parallel universes, each reigning supreme in its particular industry. However, a convergence of wills and retail zeal has sparked an impassioned competition for retail dominance between these companies that has the potential of changing the future of retail forever.

Forging a Legal Firewall: Recent Decisions May Shield Retailers from ADA-Based Website Inaccessibility Claims

Posted in Employment, Litigation, Retail

Keyboard - access key Contact usIn a post published earlier this year, we commented on a surge of lawsuits being filed under Title III of the Americans with Disabilities Act (“ADA”). Title III of the ADA prohibits discrimination in the full and free enjoyment of public accommodations on the basis of disability. Where websites and mobile applications serve as extensions of brick-and-mortar stores, some courts have held that retailers are responsible for accommodating disabled consumers on their online platforms.

We previously noted the lack of authoritative guidelines for businesses seeking to adjust their websites to comply with the law. Despite issuing a notice of proposed rulemaking seven years ago, the Department of Justice has still not promulgated regulations defining accessibility as it applies to web-based tools.  In the fall of 2015, the Department of Justice announced that it would issue the proposed regulations in 2018. However, President Donald Trump’s Executive Order 13771 will likely delay the release of such proposed regulations even further. Trump’s executive order places restrictions on new or pending rulemaking, slowing existing initiatives and requiring reconsideration of departmental priorities moving forward.

As companies await official guidance from the Department of Justice, some rely on the Web Content Accessibility Guidelines 2.0 issued by the World Wide Web Consortium. As we explained in a prior piece, the Guidelines specify ways by which retailers may improve the accessibility of online tools for those with disabilities. The Department of Justice regularly uses the Web Content Accessibility Guidelines in structuring settlement agreements with companies charged with non-compliance of the ADA. Some legal experts predict that the forthcoming official Department of Justice regulations will resemble these guidelines.

While website accessibility actions continue to bombard retailers, two recent decisions may indicate courts’ increasing skepticism of the claims. In Andres Gomez v. Bang & Olufsen America, Inc, a Florida district court held that the ADA does not require places of public accommodation to create full-service websites for disabled persons, as there is no obligation for places of public accommodation to have a website at all. The court explained that the ADA only requires that a website not impede a disabled person’s ability to do business at a retailer’s physical store. In this case, because the retailer’s website did not interfere with plaintiff’s ability to purchase their merchandise offline, the court dismissed plaintiff’s claim.

In Robles v. Dominos Pizza LLC, a California district court granted Dominos Pizza’s motion to dismiss under the primary jurisdiction doctrine. The doctrine, which has been rejected by other courts, provides for the dismissal of lawsuits pending the resolution of an issue by a government agency. Relying on the fact that the Department of Justice has not yet offered meaningful guidance on website accessibility requirements, the court found that holding Dominos to have breached the Title III of the ADA would violate Dominos’ due process rights. In reaching this decision, the court effectively rejected requiring compliance with the Web Content Accessibility Guidelines without designating concrete minimum achievement standards.

It remains to be seen whether these decisions are outliers or first in a wave of jurisprudence hostile to website inaccessibility claims. Until the Department of Justice’s regulations are promulgated or further court decisions are released, businesses would be well-advised to consult the Web Content Accessibility Guidelines when designing or making changes to their websites and mobile applications. Notwithstanding that advice, retailers should also consider the delayed implementation of regulations as a potential defense to website inaccessibility claims.

Boutique Retail Hotels: Introducing The New Meaning Of “In Room” Shopping

Posted in Hospitality, Retail, Retail Sales

Retail hospitalityIn this ever changing world, retailers are continuing to invent new ways to highlight their products, provide customers with an interactive experience and to stay competitive. We have previously discussed strategies used by brick and mortar stores to compete with their online counterparts, but retailers know that they need to think even further outside of the box in order to boost sales. A merger of the hospitality and retail worlds is one such approach that popular retailers are pursuing.

Hotel chains such as Westin, Marriot and Hilton have been selling their beds, linens and accessories in retail stores for many years. For example, you can purchase Westin’s Heavenly Bed at Pottery Barn and its linens at Nordstrom. Westin has reported that they have reached profits in excess of $150,000,000 since 2000 from the sale of mattresses and pillows alone! More recently, it has become common for luxury retail brands to open luxury hotels in Europe, including the Villa René Lalique, developed by the French crystal brand, in Alsace,  Palazzo Versace in Dubai where all of the furnishings have been designed by Versace specifically for the hotel, and Museo Salvatore Ferragamo in Florence which features a private art collection with works by Picasso and Cocteau.

American retailers are now seeing the exposure that the hotel and retail partnerships can provide by allowing retailers to showcase their products within guestrooms and hotel common areas.  The introduction of boutique hotels sponsored or owned by retailers now immerses travelers into a brand and provides them with the unique opportunity to see and try products while traveling.  The ultimate goal is of course that guests will purchase these products to bring the vacation experience to their own homes long after their hotel stay is over.

West Elm, a division of William-Sonoma, has partnered with a leading hospitality management team, DDK, to create West Elm Hotels which will feature West Elm products throughout the facilities. West Elm had earlier identified this business opportunity, but recognized that they needed to identify a partner with experience in the hospitality industry in order to be successful. With more than 60 years of combined hospitality and investment experience, DDK is an ideal partner for this venture. In addition to the use of West Elm’s products, they plan to commission local artists to produce work to display at the properties and local chefs to provide the appropriate dining experiences. West Elm Hotels will debut the first five boutique properties in late 2018. The initial hotels will be located in the cities of Detroit, Minneapolis, Savannah, Charlotte, and Indianapolis, which are all cities where the brand has little or no retail presence. West Elm executives view hotels as a way to build their brand by creating exceptional customer experiences without over saturating markets with new stores.

In addition to West Elm, retailers such as Shinola and Restoration Hardware are actively working to enter the hotel market with their products. Shinola, which markets watches, handbags and a variety of products, is scheduled to open a 130-room hotel in downtown Detroit in 2018. Restoration Hardware is in the process of obtaining permits to renovate a building in the uber-hip meatpacking district of New York in order to open a 14 room boutique hotel there which will use its entire line of products.

In order to achieve the maximum results, it is important that retailers partner with a business with expertise in the hospitality industry. This appears to be the key to the success of the retailers that have already pursued these ventures. This innovative approach to brand and product marketing may well allow retailers to reach new and different customers, thereby increasing their market share.

Class Action Lawsuits on the Rise under New Jersey’s Consumer Protection Laws – Which Retailers Will Be Targeted Next?

Posted in Litigation, Retail, Retail Sales

online-parcel-deliveryDoes your retail business conduct sales online? For most retailers today, the answer is likely yes. This means that the recent surge of class action lawsuits against merchants arising out of a consumer protection law in New Jersey called the Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA) merits your attention. This statute is still relatively under the radar of many retail businesses. Yet the numerous class action lawsuits that have been filed under the TCCWNA, and the variety of businesses across the country that have been targeted, indicates that retailers that conduct business online should be on alert, even if they do not have a physical presence in New Jersey.

New Jersey’s TCCWNA prohibits sellers from entering into a consumer contract or displaying any consumer notice “which includes a provision that violates any clearly established legal right of a consumer or responsibility of a seller … as established by State or Federal Law.” Furthermore, the TCCWNA expressly provides that a seller cannot immunize itself with a catch-all savings clause in such contract or notice that states that “any of [its] provisions is or may be void, unenforceable, or inapplicable in some jurisdictions without specifying which provisions are or are not void, unenforceable, or inapplicable within the State of New Jersey.”

The TCCWNA lay dormant for decades after it was signed into law in 1982 and has only recently been resurrected by plaintiffs seeking to take advantage of the vulnerability that the TCCWNA exposes in the era of e-commerce. Under the TCCWNA, a retailer that does business online with New Jersey customers is subject to the TCCWNA, whether or not the retailer has a physical presence in New Jersey. Many of the class action lawsuits that have been filed against retailers have focused on the retailer’s online Terms of Sale. While the TCCWNA applies equally to sellers that have brick and mortar stores in New Jersey, the TCCWNA also creates potential liability for unsuspecting retailers that do not have a physical presence in New Jersey. The statute requires that both in-state and out-of-state businesses know New Jersey law well enough to ensure that their Terms of Sale do not violate any clearly established New Jersey law. The chart below from the New Jersey Civil Justice Institute shows that lawsuits under the TCCWNA have skyrocketed in recent years, indicating that plaintiffs (or their class action lawyers) have taken advantage of retailers’ lack of knowledge regarding both the TCCWNA and clearly established New Jersey law. In the last year alone, a diverse array of retailers have been targeted, including Toys “R” Us, J. Crew, and Bob’s Discount Furniture, to name a few.

Chart for Blog 5:31

 

Retailers targeted by TCCWNA claims could face significant exposure given that damages under a class action case can reach millions of dollars and the non-prevailing party may be required to pay the prevailing party’s attorneys’ fees. Furthermore, the many uncertainties in how the statute is interpreted are making it difficult for retailers to assess their potential liability in order to devise an appropriate strategy.

This year may yield some clarity and guidance from New Jersey regarding the TCCWNA. In April 2017, the Supreme Court of New Jersey agreed to answer two certified questions presented to it by the United States Court of Appeals for the Third Circuit. The first question is whether a consumer who has not suffered any adverse consequences from a retailer’s non-compliance with the TCCWNA can be considered an “aggrieved consumer” under the law.  The second question is whether a violation of a New Jersey regulation alone would constitute a violation of a “clearly established legal right” under the TCCWNA.

In addition, New Jersey legislators have introduced bills that are aimed at both expanding the reach of the TCCWNA as well as limiting it. New Jersey Assembly Bill 759, which was introduced in January 2016, proposes to expand the protections under the TCCWNA to prohibit the inclusion of provisions in the Terms of Sale that limit customers’ rights under the TCCWNA or require customers to waive those rights, including the right to bring a class action. New Jersey Assembly Bill 4121, which was introduced in September 2016, seeks to narrow the class certification by prohibiting class certification for TCCWNA claims “in the absence of an ascertainable economic loss resulting from the alleged violation.” If either of the Bills is passed and signed into law, it could have a significant impact on TCCWNA litigation.

Since retailers will have to wait until later this year or longer for clarity from the New Jersey Supreme Court and from the New Jersey legislature, retailers who conduct business online may consider reviewing their Terms of Sale to identify any provisions that are obviously in violation of the TCCWNA and revising such provisions in order to reduce the likelihood of being targeted by class action plaintiffs. Meanwhile, retailers should keep abreast of developments in the New Jersey courts and legislature concerning the TCCWNA, as these developments may prescribe the degree of attention and resources such retailers will need to devote to minimizing their exposure under the TCCWNA.

ICSC RECon 2017 – ICSC RECon Continues to Draw the Crowds

Posted in Real Estate, Retail

ICSCICSC RECon 2017 was held last week from May 21-24 at the Las Vegas Convention Center. This year, the conference lived up to its billing as the “World’s Largest Retail Real Estate Convention” with an estimated crowd of 37,000.  This represents about a 2.7% increase over last year and continues the trend of growing attendance since the post-recession lows.

The impact of technology and social media on retail continued to be a major theme at the conference. This was reflected by the keynote address given by Steve Wozniak, Co-Founder of Apple and Chief Scientist at Primary Data, and in the professional development seminars offered at the event, which included topics such as “Social Medial For Retail Real Estate Professionals” and “Geo-Fencing/GPS Signal-Tracking”. Retailers and shopping center owners alike continue to be challenged by increasing competition from e-commence businesses and the need to develop an effective omni-channel strategy in this rapidly changing, and increasingly mobile, retail landscape.  In light of these changes, many at this year’s show expressed some concern about which retailers are actively seeking new deals.

But despite these headwinds, the mood at the convention was still largely positive. Cushman & Wakefield celebrated its 100th year in the industry with a large “Recharge at RECon” station with a full coffee bar and television broadcast set-up. From its prime spot in Central Hall, the global commercial brokerage and consulting company generated some buzz around the halls by broadcasting live interviews on the company’s social media websites and handing out free lattes. This year also saw the return of DDR Corp to the Las Vegas Convention Center floor. After presenting off-site during the last few years at RECon, the Beachwood, Ohio-based REIT returned to the middle of the deal making action with a new state-of-the art booth. This return generated some energy at the show, where the crowds streamed from meeting to meeting across the showroom floors. The wheeling and dealing continued late into the evenings at dinners and cocktail parties throughout the Strip as landlords and tenants worked in the hopes of getting deals done.

Getting Past the Last Mile: Delivery Challenges For E-Commerce Businesses

Posted in Retail, Retail Sales

deliveryE-commerce businesses have changed the relationship between consumers and retailers through the advent of expedited and low-cost home delivery services. Now, many consumers anticipate both free shipping with their purchase, and to receive their items in a short one to two day window. While there is significant growth in the online shopping market, high shipping cost creates a problem for businesses struggling to keep up with the expectation of modern consumers.

The final leg between a retailer’s distribution center and the consumer’s doorstep is known as the “last mile,” and it is generally the most expensive part of the shipping journey. Research shows that 28% of this total delivery cost comes from the e-commerce last mile delivery implementation. The main characteristic of the last mile that distinguishes it from other transportation legs is the home delivery aspect, which is often the sole contact between the supplier and consumer. While every aspect of the delivery chain encounters varied obstacles, the last mile proves particularly difficult. In many markets, especially urban centers, getting packages to a customer’s doorstep is challenging. The rise in home-delivery demand has strained residential city streets that aren’t designed to handle increased trucking traffic. And most multi-unit buildings and housing complexes are not able to process such high-volume deliveries.

Many major retailers, wanting to maintain their product-flow and reduce shipping costs, are searching for a solution to the last-mile dilemma. One such solution is the creation of “fulfillment centers.” A fulfillment center allows customers, who place online orders, the ability to pick up their items at a nearby physical location. Along with decreasing the shipping costs, the benefits include faster delivery of merchandise and the leveraging of existing store personnel. According to Macy’s CEO Karen Hoguet, “We’re finding that customers don’t really care from where we pull the goods, as long as we fill the order accurately and the delivery is timely…We expect these fulfillment locations will be key to offering faster and even same-day delivery, and also will enable the customer to buy online and pick up in-store.” For businesses, like Macy’s, with an existing brick-and-mortar presence, this solution may be a viable alternative. However, many shopping center landlords refuse to allow fulfillment centers at their developments, in preference of more active, vibrant retail uses.

E-commerce businesses can also address their delivery issues by constructing brick-and-mortar buildings, where customers familiar with their products and service can both shop and receive their deliveries. In 2015, Amazon, previously only operating online, launched Amazon Books in Seattle. The new Amazon retail space mirrors the feel of a book store, while creating a location for delivery pick-up. But not every e-commerce business can afford to have a brick-and-mortar presence.  As an alternative, e-commerce businesses can implement automated locker systems or customer service centers to address customer deliveries. Amazon has even considered using drones to deliver packages via parachute, though the method presents issues of both safety and efficiency. While there is no current “one size fits all” solution to the dilemma of the “last mile”, successful e-commerce businesses will need to meet this challenge head on and think creatively to provide an effective and lasting strategy.

The Future of Urban Retail: A Business Real Estate Roundtable

Posted in Real Estate, Retail

NYC retailAs the competitive retail marketplace continues to shape itself, we take an active role monitoring trends and uncovering the legal ramifications.  This week, we are pleased to share Crain’s New York Business Real Estate Roundtable. In this piece, the discussion centers on The Future of Urban Retail. Our partner and leader in New York real estate retail, David Rabinowitz, answers questions ranging from what his clients are concerned about these days, the state of the luxury retail market in NYC, and the explosion of experiential retail concepts and why they’re so effective. Read more from Crain’s.